Associated British Foods plc (LON:ABF) (ABF.L) has released interim results today for the 24 weeks to 3 March 2018. They show a rise in revenue of 3% at constant currency, with adjusted operating profit moving 1% higher.
The company’s adjusted EPS increased by 3%, with dividends per share rising by the same amount to 11.7p.
The company generally made good progress during the period in my view. All of its various businesses achieved sales and profit growth at constant currency, other than Sugar where the fall in those metrics was as per expectations.
ABF’s full-year outlook is unchanged following today’s update. It expects to make further progress in adjusted operating profit and in adjusted EPS.
In my view, the results are relatively impressive. The retail environment continues to be challenging in the UK, but ABF’s Primark division could stand to benefit. Its focus on a budget offering and on value for money could appeal to UK consumers who may be more price conscious due to inflation squeezing their disposable incomes in real terms.
Since the start of 2018, the ABF share price has fallen by 10%. That’s a better result than sector peer Debenhams Plc (LON:DEB) (DEB.L), but is behind the performance of WM Morrison Supermarkets PLC (LON:MRW) (MRW.L). Debenhams has fallen by 37% in the same time period, while the Morrisons share price has risen 6% since the start of the year.
In my view, ABF has investment appeal for the long run. Its update today shows that it is making progress with its performance across all of its business units. While its share price has disappointed so far this year, I feel that the growth potential from Primark in particular could lead to an improving performance over the medium term. That’s particularly the case on a relative basis versus the wider retail sector.